Quote from: smooth on May 18, 2015, 11:21:52 PM

Quote from: justusranvier on May 18, 2015, 11:10:49 PM

Quote from: smooth on May 18, 2015, 10:39:34 PM

We don't know that Coinbase limits their tracking of "bad" activity to "one hop." In fact I'm pretty sure at least one of the reported cases was more than one hop.

Part of the consideration that went into the payment code proposal was finding a way to make analysis of transactions impossible beyond one hop.

Even if they want to do multi-hop analysis, it's possible to make that unfeasible.

I don't think you understand what Coinbase is doing. For example, even with non-reused addresses, compliant participants may report their addresses to a risk-scoring service. If you go outside that "system", boom your coins risk score goes way up.

As long as these things remain associated with the coins themselves, fungibility is impaired.

This is where we are disagreeing then.

To the bitcoin network 1 BTC blacklist or low score coin = 1 BTC whitelist coin. They are perfectly the same to the network itself, that is fungibility. This is very different from the diamond example a post up.

You can argue that for gold you could melt it down and recast in new coins to recover all privacy, but I'd argue that advanced mixing could do the same in time.